Stephens Lawyers & Consultants
On 7 September, 2026 the Australian Government released its draft legislation[i] – the Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 – which will ban non‑compete clauses in employment contracts for low and middle income Australian workers, with some exceptions.
Non-compete/restraint clauses are important for preserving significant investment in business development and client relationships, and maintaining workforce stability and continued investment in training, education and development of knowledge and skills of employees[ii]. Courts will enforce non-compete/restraint clauses where those clauses are reasonable having regard to the legitimate interests of the employer and if required to protect the legitimate business interests of the business[iii].
Businesses affected by the proposed ban on non-compete/restraint clauses can make submissions to the Government on the draft Bill until 2 October 2026 via https://consult.treasury.gov.au/c2026-801178 . Businesses should also be contacting their local member of Parliament and raising their concerns about the proposed ban and the impact the ban will have on their business.
The draft Bill follows the Government’s Consultation Paper which asked whether we need reforms for non-compete clauses for high-income workers, non-solicitation clauses and employment restrictions on having multiple jobs. During the consultation period, which ended 5 September 2025, sixty-seven (67) submissions were received. Concerns were raised regarding the ban enabling large corporations to hire-away from small competitors and start-ups, as well as the potential for employees to steal company information, intellectual property or entice clients or colleagues away from organisations.
Summary of the proposed bans on non-compete/restraint clauses
The Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 (the ‘Bill’) introduces amendments to the Competition and Consumer Act 2010 (Comm) and the Fair Work Act 2009 (Comm). The Bill will:
- ban ‘non-compete terms’ for workers whose annualised full-time equivalent earnings are equal to or less than the Fair Work Act 2009 high‑income threshold (currently being $190,100 per year).[iv]
A non-compete term is “a term or condition of employment which restricts, prohibits or prevents an employee from seeking other employment or being involved in any business or undertaking subsequent to their employment.[v]
However, excluded from this definition (and from prohibition) are post-employment restraint of trade terms that are necessary to protect a legislated legitimate interest and are reasonable.[vi] For example, terms that restrict, prohibit or prevent the employee from using or disclosing confidential information of which the employee has gained knowledge or come into possession of during their employment, are not non-compete terms.
- ban co-worker non-solicitation clauses – irrespective of income.[vii]
- ban no-poach and wage-fixing agreements.
A no-poach agreement is “a term of a contract, arrangement or understanding between two or more parties agreeing to not recruit, solicit or hire each other’s existing, former or future workers”.[viii]
A wage-fixing agreement is “a contract, arrangement or understanding between two or more parties to directly or indirectly fix, maintain, decrease or control remuneration or terms and conditions of employment or engagement of each other’s current or future staff.”[ix]
- introduce limited exemptions for no-poach and wage-fixing agreements “where they are ancillary to legitimate business arrangements that are likely to have a net benefit to workers and/or the economy. These exemptions will apply in limited circumstances, including joint ventures[x], secondments[xi], labour-hire arrangements[xii] and professional sporting leagues[xiii], where specific conditions are satisfied”[xiv] ; and
- strengthen rules for remaining restraints of trade.
Prohibited terms will be unenforceable. In addition, employers that use prohibited terms risk incurring civil and criminal penalties.
In a related article titled “Why are non-compete/restraint clauses required in employment contracts?” Stephens Lawyers and Consultants discusses a recent case which demonstrates why non-compete clauses should be maintained in employment contracts. To read the article see [HERE]
© Stephens Lawyers & Consultants. 22 September, 2026 ; Authored by Katarina Klaric, Principal and Rochina Iannella, Stephens Lawyers & Consultants
This update is not intended to be a substitute for obtaining legal advice.
For further information contact:
Katarina Klaric
Principal
Stephens Lawyers & Consultants
Melbourne Head Office
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[i] Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 (Comm)
[ii] Joint Media Release. Ministers’ Media Centre, Minister of Employment and Workplace Relations Portfolio. “Cracking down on-non complete clauses to boost wages and productivity” – 25 March 2025. Australian Government – The Treasury, Consultation Paper titled ‘Reform to non-compete clauses and other restraints on workers”, 25 July, 2025
[iii] Christopher Arup, Chris Dent, John Howe and Wiliam Van Caenegem, Restraints of Trade: The Legal Practice 2013, UNSW Law Journal, Volume 36 (no.1) 1-14
[iv] THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA, House of Representatives, Competition and Fair Work Legislation Amendment (Banning Unfair Non-Competes) Bill 2026 – Exposure Draft Explanatory Materials 2026 – at Par 2.14
[v] Ibid – at Par 2.25
[vi] Ibid. at Par 2.29 – 2.30
[vii] Ibid. – at Par 2.14
[viii] Ibid. – at Par 1.23 [Item 6, subsection 45ADA(2) of the CCA]
[ix] Ibid. – at Par 1.25 [Item 6, subsection 45ADA(3) of the CCA]
[x] Ibid. – at Par 1.34 [Items 8 to 14, section 45AO, subsection 45AO(2), section 45AP and subsections 45AP(1) and (1A) of the CCA]
[xi] Ibid. – at Pars 1.54 – 1.56
[xii] Ibid. – at Pars 1.62 – 1.64
[xiii] Ibid. – at Pars 1.68 – 1.71
[xiv] Ibid. – at Pars 1.29 – 1.32